(via)
Poem about the state of the America. (Marketplace Minute for 7/2 (via))
We were gonna pay for financial reform The recovery is tiring. Let’s see … Oh, the oil spill’s fixed! … Nah, I’m just teasin’ — Uh, Supreme Court squashes the handgun ban? You know what, these headlines are leaving me flat Have fun with your sparklers and Francis Scott Key,TEXT OF POEM
with a tax on the banks, who created the storm.
Instead, the money will come from — I swear —
the bailout fund. ‘Cause that seems fair.
Nobody’s hiring.
Something wrong with Toyota’s wiring.
World Cup … the Americans lose.
I’m trying to find some positive news.
It’s spewing like hell and it’s hurricane season.
I guess that’s good, for a firearm fan.
It’s a three-day weekend, let’s focus on that.
and I’ll see you at marketplace.org.
Who should investors listen to; the markets or the Fed? One says we are in for a double dip recession, the other just raised GDP forecasts. The head of our central bank Benjamin S. Bernanke has a perfect track record for predicting economic outcomes. Unfortunately, his track record is only perfect due to its 100% inaccuracy. The Fed Chairman once assured investors that the subprime housing crisis was contained and would not bring down real estate prices or affect the overall economy. Then, after being proven completely wrong by the near collapse of the entire global economy, Mr. Bernanke moved to an emergency Federal Funds target rate of 0-25 bps and has held it there for 17 months. And even though the economy has posted three straight quarters of growth, has shown no inkling to provide American savers with a decent return on their money deposited in banks. Now we find the Federal Reserve once again proving it has an unlimited aptitude for ineptness by actuallyraising their G.D.P. forecast from a growth range of 2.8%-3.5% to 3.2-3.7%. That’s correct; Federal Reserve officials raised their U.S. growth estimates for 2010 and lowered forecasts for unemployment and inflation, according to minutes of the Federal Open Market Committee meeting on April 27-28. They left their 2011 forecast unchanged at 3.4 percent to 4.5 percent. Fed officials’ forecast for the average unemployment rate in the last quarter of 2010 fell to 9.1 percent to 9.5 percent versus 9.5 percent to 9.7 percent estimate made in January. However, contrary to the Fed’s predicted trend of improvement in employment numbers and economic data, on Thursday we saw first time claims for unemployment jump by 21,000 to 471,000 in the week ended May 15th. The four-week moving average also climbed to 453,500 last week from 450,500. Additionally, the Index of Leading Economic Indicators during the month of April saw a .1 percent decrease. That dip in the Conference Board’s outlook for the next three to six months followed a revised 1.3 percent gain in March and was the first decline for the index in a year. Meanwhile, sovereign debt contagion threatens to dismantle the Euro currency as Eurozone borrowing costs may become intractable if interest rates continue to rise. China is busy trying to pop their property bubble at the same time the Shanghai Composite Index is down 21% in 2010. Not to be outdone, Australia has collapsed their resource sector by imposing a 40% tax on the earnings of mining companies. The threat of a metastasizing government debt default crisis similar to the credit crisis of 2008 has sent crude oil prices tumbling from over $85 a barrel to $68 in a matter of weeks. Dr. Copper has plummeted from $3.60 a pound in April to $2.93 as of this writing. But none of that matters to the Fed or gives them pause to reflect on their ebullient outlook. It doesn’t take superhuman predictive powers to have the ability to look at markets. What is it that Mr. Bernanke and company look at other than the rear view mirror when making prognostications about growth, unemployment and inflation? We have given the most incredibly powers to the Federal Reserve; namely, to dictate a target rate for the cost of money. But we have allowed to be appointed at the Fed a group of individuals who not only cannot accurately assess a given series of data but also have chosen to completely ignore markets. The CRB Index is trading at its lowest level since October of 2009 and is telling investors that the global economy is in the process of slowing. But the Fed is stacked with academics that have never had to earn a living by predicting economic and market directions. Their failure to listen to the message of markets is the key reason they have such a miserable record of making accurate projections. For the betterment of the nation, the next appointment to serve at the Fed should be someone from the trading pit and not from Princeton. (via)
The stocks of US manufacturing firms are not plunging because German banks are exposed to Greek debt—they are plunging because markets fear falling AD will lead to falling orders for manufactured goods. Sure, you can always tell a disintermediation story as Bernanke did for the Great Depression, but I just don’t see how it’s plausible in this case. We don’t have 9.9% unemployment because firms can’t get financing to meet orders, we have 9.9% unemployment because their order books are half empty. We need more NGDP, banking will then take care of itself.
TheMoneyIllusion - A slightly off-center perspective on monetary problems. (via)
I thought this was interesting:
Would an organization called the Electronic Frontier Foundation already know that web browsers have been “leaving fingerprints behind” as people surf the internet for something like ten years? That is what the internet platform is designed to do. It was…
(via Patricia)
The car you drive on the autobahn does leave a (carbon) footprint too. People see what car you drive, with or without seatbelt, how fast, …
I see the Network == Roads. Internet and Web is just the term media and pundits to describe it.
Governments build roads, railways, harbours, airport terminals because they saw it as necessity for (and to accelerate) economic growth (industrial revolution was reliant on transportation).
Internet (ARPANET, Advanced Research Projects Agency Network) was a Government/Military funded project done by Universities. The Military saw benefits in instant communication of its computer assisted defence systems on the East- and West-Coast (Hawaii) and across the Atlantic (Norway). One has to remember that this was the time of the Cold War and the threat of nuclear war.
So, while various transportation networks were build, improved, extended during the Industrial Revolution to facilitate trade and economic well-being and efficiencies (urban travel - the NYC Metro), the Internet has the background of the Cold War and urge to protect this economic well-being.
And it took again Government (1991), representing public and economic interest, to build a platform where commercialisation can prosper.
Here is the document. Have a look who participated to draft it.
The United States would benefit significantly from the creation of a national research network (NRN). […]
An NRN would create a computer network infrastructure to provide much-needed support to the scientific research community. Data obtained by the committee regarding current and anticipated research activities demonstrate that an NRN could dramatically improve the productivity and quality of output of the U.S. research community. Through these direct .benefits, plus commercial spinoffs from associated computer and network research, an NRN could greatly promote U.S. competitiveness in a multiplicity of disciplines.
» The Guys invented Freemium (although not coined it).
To encourage the development and use of a widely accessible network service, the committee suggests that the NRN might provide (1) a universal basic service at some low to moderate speed for electronic mail at a low cost to users and (2) higher levels of service with an appropriate charging structure. A low charge for basic service would lessen the initial resistance that might otherwise be felt by first-time users and yet discourage the overloading that occurs with free networks.
» Why Academics, IBM, AT&T, Bell and others went to Congress?
This committee believes that unless a stable source of funding is provided, the NRN will never achieve the impact of which it is capable.
Watch video from Google Zeitgeist 2010 with Wang Shuo (Editor, Caixin Media) and others.
Real Market Control for Bubbly Real Estate
Speculation, unrealistic attitudes and easy credit are reasons why China’s property market bubble might pop – and action is needed
China’s Foul Assets, Fouler Yet
Within the government’s ambit is a series of policies that could address the momentum of the status quo, so why have they been foundering so far?
China continued to lure more foreign direct investment at a double-digit pace(Beijing) - China attracted US$ 734.6 million worth of foreign direct investment in April, up 24.7 percent from the same period of 2009, according to statistics released by the Ministry of Commerce.
This was the ninth straight increase in foreign direct investment since August 2009.
In the January-April period, foreign direct investment in China rose 11.28 percent to US$ 30.7 billion.
China was selected as one of top three destinations for investment by 77 percent of respondents surveyed by the American Chamber of Commerce in China. However, many foreign businesses cited inconsistent regulations as the top obstacle to doing business in China.
By listening to each other, we have been able to partner with each other. […] Knowledge is the currency of the 21st century. […]
[Entrepreneurship is an] area where we can learn from each other. It empowers the innovator and inventor. Where men and women can take chance on a dream. Taking an idea, which starts around a kitchen table or in a garage, and turning it into a new business and even new industries which can change the world.
[T]he market has been throughout history the most powerful force the world has ever known for creating opportunity and lifting people up out of poverty. Entrepreneurship is in our mutual economic interest.
Barack Obama (video)
Strikes paralyse Athens and Lisbon
Transport strikes paralyse parts of Portugal and Greece as public sector workers protest against government austerity measures.
Jayati Ghosh (Prof of Economics) and book author concludes —- there is no Indian miracle. 110 million living well, hundreds of millions in abject poverty who make growth possible.
There are people benefiting of the expansion (Software Industry) which relies on below subsistence wages on the micro level.
As the President ponders who he’ll nominate to the Supreme Court, it occurred to me that my Senate testimony against the confirmation of John Roberts in September 2005 might be of some use in thinking about the kind of person America needs in that office, and who it doesn’t. Herewith:
***
Is the well-being of our society the sum of our individual goods, or is there a common good that must be addressed? The answer will shape the American economy and society of the twenty-first century.
Very well cerebrated.
